New Enterprise Software Business Models

Bruce Daley is moderating a discussion on new enterprise
software business models. The following is a summary of a lot of
comments from many people.

Subscription software model has significant benefits for
software vendors: they don't have to spend large amounts of money
in maintaining old releases, ensuring backward compatibility, and
so on. Another advantage is that ongoing revenues are easier to
predict. In the traditional perpetual license model, customers wait
for the last two weeks of the quarter and beat you up on price. You
never know going into the last two weeks what your sales will
be.

The downside of the annuity business is that you've got twelve
closings per year instead of four. You can't catch up if you miss a
month. You have to perform every month to keep customers and keep
the revenue flowing. The other side of the coin for maintaining old
releases is that its much more difficult to do revolutionary
upgrades because everyone is coming along at the same time.